Learning how to make money in a bear market is a crucial skill for any investor who aims to protect capital when markets decline. In a declining market, simply holding stocks might not work, but alternative tactics like options trading can generate returns.
When discussing settlement terms, what many call the cash payment settlement option is often cash settlement, meaning the no physical asset is delivered.
An options education program can equip traders with knowledge such as call vs put options. A call contract gives the ability to acquire an asset at a set price, while a put gives the right to sell it.
In trading terminology, the difference between buy to open and buy to close is important. Entering a trade via purchase means creating a new position, while Closing a position by buying means closing an open short trade.
The popular iron condor technique is a neutral-market options strategy using two spreads combined, aiming to earn premium in a sideways market.
In market orders, bid compared to ask reflects the buy and sell prices. The buy bid is what a trader offers to buy, and the offer is what is required to sell.
For options, differences between sell to open and sell to close is another distinction. Initiating a short by selling means beginning with a sell order, while Closing a long position by selling means selling an asset you own.
Rolling a position is extending or changing terms by changing trade parameters to capture more profit.
A trailing stop is a stop that follows price that locks in profits by moving with the market. This is not to be confused with a fixed stop, since it adjusts without manual input.
Chart patterns like the two-peak pattern signal possible trend change after two failed breakouts. Recognizing it can trigger short entries.
Overall, learning options trading course for beginners these definitions — from differences between call and put to what is trailing stop loss — prepares market participants to succeed in any market condition.